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Daily Reports @ WJR

WJR February 2011 Reports

February 28, 2011

There’s a little bit of everything (actually a LOT of everything) on the agenda today.

Several Central Bank officials are speaking today, including one who has been on a business cable channel most of the morning. Some encouraging words on the economy from him appear to have sparked a rally in the stock futures, which had been flat until about an hour ago.

Outside of the Fed-heads, we’ll get January Personal Income and Spending numbers in about 15 minutes. Expect each to be up four-tenths of a percent. The February Chicago PMI is expected to read 68 at 9:45, and then the January Pending Home Sales number comes at 10 o’clock.

There are a couple of major league deals this morning. In the healthcare-REIT space, Ventas is buying National Health Properties at a 15 percent premium. That’s a 7.4 billion dollar deal. Blackstone is reportedly buying Centro’s shopping mall assets for about 9 billion.

NYMEX Crude oil has been dropping during the past hour, just above the 97 dollar level.

South Korean stocks are lower on tensions about some military exercises, but most other overseas markets are higher. Our futures took a swift turn higher about an hour ago.

Right now, adjusted for fair value, the S&P futures are up almost 7 points, the Dow futures are up 50 and the NASDAQ futures are about 11 points above fair value.

February 18, 2011

It should be a fairly uneventful day for the market, as no big earnings reports or economic reports are scheduled. Maybe it will just be a good opportunity to pause and reflect on a stock market that has more than doubled in value over the past 23 months.

The focus of the day, if one exists in front of the long holiday weekend, will be the start of the G20 meeting in Paris. Ben Bernanke and Treasury Secretary Geithner will both be there chatting it up.

Last night, Brocade announced first quarter results that were better than expected. Brocade shares are looking about 3 percent higher pre-market.

Stocks rose in Hong Kong, but the Shanghai Index was off about one percent, as the Chinese Central Bank raised the banking reserve requirement another 50 basis points.

European markets are mixed. The dollar index is flat. In summary, there’s just not a whole lot going on anywhere, including our futures.

Right now, the S&P 500, Dow and NASDAQ futures are all within a point or two of fair value.

February 17, 2011

It’s kind of a storm before the calm today. A flurry of earnings news and economic reports are on the docket today with next to nothing scheduled for tomorrow.

On the earnings front, CBS, Barrick Gold and Nvidia are among the companies reporting better than expected earnings. Duke Energy reported 21 cents, which missed by 2 cents, but did so on higher than expected sales and Duke raised their earnings guidance for the entire year.

Gas producer William Companies announced that they will spin off their exploration and production businesses over the next couple of years. They raised their dividend by 60 percent and Williams Companies shares are indicated about 12 percent pre-market.

Apple shares are indicated lower this morning after media reports that Steve Jobs was spotted at a California cancer center recently.

At 10 o’clock, the leading economic indicators are expected to be up two-tenths of a percent. We’ll also get the Philly Fed Survey, which measures regional economic conditions. However, the first big report of the morning will be the January Consumer Price Index. Expect a half percent headline and one-tenth of a percent for the core rate. Also at 8:30 the weekly jobless claims are expected to bubble up to the 410,000 level.

On the whole, overseas markets are pretty much unchanged. Our futures are off their lows of the morning, but are still indicating a slightly lower open for stock prices. Right now, adjusted for fair value, the S&P 500 futures are down almost 2 points, the Dow futures are down 11, and the NASDAQ futures are about 5 points below fair value.

February 16, 2011

Less than three weeks ago we were scratching our heads about a 36% run-up in the shares of Ann Arbor based Border’s, a company that seemed destined for a date in bankruptcy court. Well, that date is today. Border’s announced the filing this morning and says it will close 30 percent of its stores within the next few weeks.

Deal news, earnings news, economic reports – we’ll got it all in spades this morning. Family Dollar shares are looking to rise almost 30 percent this morning on a buyout bid from a private equity firm. Dollar General, Dollar Tree and pretty much any stock with the word “dollar” in its name is rising on the news.

The nine-month long soap opera that is the Sanofi-Aventis buyout of Genzyme is over as those two firms will merge.

Better than expected earnings reports are out from heavyweights Dell, Comcast and Deere this morning.

And, in an investment world that seems fixated on the threat of inflation, we’ll get the January Producer Price Index at 8:30. Expect seven tenths of a percent on the headline and two tenths of a percent ex-food and energy. Housing starts and industrial production numbers will also be announced before the market opens.

Not to be ignored in the midst of all that, the Federal Reserve Open Market Committee will release its most recent meeting’s minutes at 2 o’clock which could make for an interesting read.

The ground that stocks late-day rally didn’t recover yesterday should be recovered by 9:30 this morning. Right now, adjusted for fair value, the S&P 500 futures are higher by about 6 points, the Dow futures are up 44, and the NASDAQ futures are almost 8½ points above fair value.

February 15, 2011

At 8:30, we’ll get the score on January Retail Sales. The consensus expectation is an increase of a half percent in both the core rate as well as the auto sales component. That would be just a tenth of a percent weaker than December.

Also at 8:30 the Empire Manufacturing Index will give us an indication of the health of the manufacturing recovery on the East Coast.

The hotel and timeshare business is evidently getting healthier. Marriott reported earnings this morning that were 63 percent from a year ago. Marriott also announced that they will spin off the timeshare business this year.

Not such great news from FedEx last night. FedEx cut their earnings estimate for the quarter. Big snowstorms and rising fuel costs will cut the quarterly profit to around 80 cents from $1.05

Stocks rose slightly in Japan overnight, but were pretty much unchanged in Mainland China. European markets show no clear direction.

Our futures have been drifting slightly below fair value most of the morning and have continued that drift lower during the past half hour. Right now, adjusted for fair value, the S&P 500 futures are down a bit more than 3 points, the Dow futures are down 22, and the NASDAQ futures are a little more than 5 points below fair value.

February 14, 2011

We all get to enjoy Valentine’s Day today without worrying about any of those pesky economic reports from the Government. There are a lot of them on the way this week, all crammed in to the middle of the week.

In the meantime, we’ll have to listen to the politicians start kicking around the President’s budget proposal. Of course, it might be nice if Congress completed all aspects of the 2011 budget before they start arguing about 2012. But, let’s not spoil a holiday that should be devoted to love.

Employees at Hughes Communications will be falling in love with Echostar. Either that, or they may be employed somewhere else soon. Echostar is buying Hughes for 1.3 billion dollars. That just over 60 bucks per share. No big premium here, as the deal is no big surprise.

The economic numbers from China continue to boggle the mind. The Chinese trade surplus was over 13 billion dollars in December. It fell by half in January as exports rose 38 percent, but imports grew 51 percent. Mainland Chinese stocks rose over 2½ percent overnight.

European markets are mixed.

Our futures have been stuck in neutral all morning, and still haven’t found the clutch. Right now, adjusted for fair value, the S&P 500 futures are down a point, the Dow futures are flat, and the NASDAQ futures are about a point below fair value.

February 11, 2011

If you REALLY like to watch the latest movies – here’s your chance to stock up for the weekend. Word is that the struggling Blockbuster chain is putting itself up for sale, as a bankruptcy alternative. The rumored price is 300 million or more, plus assumption of some liabilities.

In Europe this morning, Nokia appears to be waving the white flag regarding smartphones. Nokia’s Symbian operating system, which has been losing market share to Android at a precipitous rate, will be nudged to the sideline as Nokia will instead adopt Microsoft’s smartphone operating system. As a result, Nokia will cut headcount and withdraw earnings guidance. They’re now calling 2011 and 2012 “transition” years. Traders are “transitioning” Nokia stock significantly lower in European trade.

Kinder Morgan’s IPO went very well yesterday. They sold 95 million shares at 30 bucks apiece.

Just before ten this morning, we’ll get the first February reading on consumer sentiment from the Reuters/University of Michigan survey. Expect a reading of 75, up from January’s 74.2.

Meanwhile overseas markets are once again mixed. Although the futures are pointing a little lower, watch out for another late day melt-up in prices, as we’ve seen most days over the past few weeks. The S&P 500 has now risen 12 of the past 15 sessions.

Right now, adjusted for fair value, the S&P 500 futures are down 4 points, the Dow futures are down about 30, and the NASDAQ futures are a little more than 5 points below fair value.

February 10, 2011

More of the same appears to be the order of the day for economic news.

This morning, the Bank of England reaffirmed their Quantitative Easing program and held short term interest rates at the one-half of one-percent level.

At 8:30, the weekly Jobless Claims number is expected to waffle around the 415,000 level, just as we saw last week.

Pepsico beat estimates by a penny per share last quarter on better-than-expected sales. However, Pepsico, like so many other companies that make stuff, warned that input costs are rising. That has the stock indicated a bit lower this morning. Speaking of lower, Cisco Systems beat estimates last night, but concern about profit margins and soft switch sales had the stock looking up to 8 percent lower in after-hours trading.

Mainland Chinese stocks were up over two percent overnight, but most other markets overseas are lower. Our futures started to skid after the Cisco report last night and have continued to slide this morning. We’ll see if we get another one of those afternoon melt-ups that we’ve grown to know and love of late.

Anyway, at this point, adjusted for fair value, the S&P 500 futures are lower by about 6 points, the Dow futures are down about 43, and the NASDAQ futures, reacting to the Cisco guidance, are about 18½ points below fair value.

February 9, 2011

The recent melt-up in stock prices continued yesterday, as the Dow made it seven straight days of a rising index. That winning streak may hit some turbulence and 10 o’clock today when Fed-head Bernanke has a little chat with the House Budget Committee. This will be the bearded one’s first testimony before the newly Republican-controlled House of Representatives. That doesn’t necessarily mean that the questions will be any better, but they could be a bit more pointed.

Point to Disney is you’re looking for a good earnings report this morning. Revenue was up 10 percent, profit up 54 percent and Disney shares are looking about 3 ½ percent higher pre-market. Also looking to open a bit higher are shares of Coca-Cola. Coke matched the 72 cent estimate of operating earnings. Worldwide volume rose 4 percent. Revenue, at 10 ½ billion, was about 5% higher than expected.

Chinese stocks fell another one percent overnight. Other overseas markets are narrowly mixed. Our futures have been lower all morning, but not by a whole bunch.

At this point, adjusted for fair value, the S&P 500 futures are lower by about 5 points, the Dow futures are down about 17 points, and the NASDAQ futures are about 7½ points below fair value.

February 8, 2011

We’re hitting some headwinds this morning, as China’s Central Bank is raising interest rates for the third time since October. Interest paid on savings will rise to 3 percent. The one-year lending rate will rise to just over 6 percent. Both rates are rising a quarter of one percent, as the Chinese seem to detect an inflation problem that’s remarkably invisible on this side of the Pacific.

The flood of big earnings reports has slowed to a trickle. But there are a couple of reports of note this morning. Toyota, which is a company that has certainly had an interesting year or two, reported a rather unimpressive quarterly operating profit of 99 billion yen. That’s a nearly 50% drop year over year. However, Toyota’s forecast for the full year is raising eyebrows. They are now projecting 550 billion yen from operations, versus the Street estimate of 380 billion yen.

The National Federation of Independent Businesses survey of small business sentiment rose to 94.1 from 92.6 this morning, as small business people are evidently feeling better, if not quite great, about business conditions. The long-term average level of that survey is about 100.

Four Fed officials are running around giving speeches today, with three of them speaking during trading hours. But there are no major economic reports on the agenda.

Our futures, which had been positive earlier, slipped below fair value a little more than an hour ago. At this point, they’re pretty much flat. At this point, adjusted for fair value, the S&P 500 futures are down just a fraction, the Dow futures are down 2, and the NASDAQ futures are about 3 points below fair value.

February 7, 2011

Another Merger Monday is upon us, with a couple of well-rumored deals and a couple of big surprises. The biggest surprise deal of the morning has AOL lurching left with its online content. AOL is buying Huffington Post for 315 million dollars. But Arianna is not riding off into the sunset. She’ll reportedly be running AOL’s online content.

A little surprise in the offshore drilling space, Ensco is buying Pride International.

Berkshire Hathaway is buying the 20 percent of Wesco Financial that it didn’t already own. In the big deal of the morning, Danaher is buying Beckman Coulter for an 11 percent premium to Friday’s price, but a nearly 50% premium to Beckman Coulter’s December price.

Ninety-nine cents in quarterly operating earnings from the number 2 toy-maker Hasbro were seven cents ahead of estimates, although sales and profits were both lower than a year ago.

There’s a report due on Consumer Credit at 3 o’clock this afternoon. But outside of that, the economic calendar for the day is pretty clean.

The Greek, Russian and Taiwanese markets are one to one and a half percent lower, but most other markets overseas are in the green. Our futures are higher, but are well off their best levels of the morning.

At this point, adjusted for fair value, the S&P 500 futures are up 3½ points, the Dow futures are up 23, and the NASDAQ futures are about 4 points above fair value.

February 4, 2011

By and large, the fourth quarter earnings season has been impressive. Corporate profits have again risen faster than estimates. But profits will hit a wall at some point unless employment picks up. And here we are at the First Friday of the month again. That means, of course, that the Labor Department will check in at 8:30 with the January Employment Data.

Expect an increase of about 150,000 non-farm jobs in January. That would be a bit better than December’s 103,000. However, the Unemployment Rate is expected to pick up to 9.5% from 9.4%. We’ll also find out with this month’s report just how many of the jobless have been jobless for more than 99 weeks.

On the earnings front, Tyson Foods checked in with 75 cents of operating profit. That beat estimates by 13 cents. CIGNA, at $1.05, also beat the earnings mark by 13 cents. AETNA raised earnings estimates for the year fairly significantly and raised their dividend. On the always-present flip side, Pulte homes reported a 44 cent per share loss, as sales fell to 1.2 billion form 1.7 billion a year ago.

Dallas Fed head Richard Fisher gives a speech this afternoon at the University of Texas at Dallas, although nothing earth-shattering is expected there.

Our futures never stray too far from the flat line on Jobs Friday, although they’re more positive this First Friday morning than most. Right now, adjusted for fair value, the S&P 500 futures are up nearly 2 points, the Dow futures are up 19, and the NASDAQ futures are about 5½ points above fair value.

February 3, 2011

Traders worldwide continue to keep one eye on the Egyptian situation. But outside of Cairo, the other eye of domestic stock traders will have a lot of data to look over as the day unfolds.

Last Thursday, the weekly jobless claims number spiked higher by about 50,000 claims, which broke a string of improving weekly reports. At 8:30 this morning, expect the new claims number to resume a downward tack to the 425,000 level.

At 10 o’clock, we’ll get the ISM report on expansion in the services sector. Expect a reading of 57, which indicates moderate expansion similar to the December level.

Better than expected earnings reports this morning from Cardinal Health, AutoNation, ITT, CVS and Sony. The biggest surprise came from Dow Chemical, with operating profit of 47 cents, which was nearly triple the 18 cent estimate. BJ’s Wholesale may be putting a “for sale” sign on the whole company, but don’t expect a discount price. Shares of BJ’s are indicated about 13 percent higher this morning.

Ben Bernanke will speak to the National Press Club right around 12:30 today, no doubt to update the media regarding the direction of interest rates and to give his Super Bowl prediction.

Asia was mostly higher overnight. Europe is mostly lower this morning. At this point, adjusted for fair value, the S&P 500 futures are lower by about 4 points, the Dow futures are down 27, and the NASDAQ futures are about 9 points below fair value.

February 2, 2011

Happy Groundhog Day, everyone. No shadows to be found around these parts this morning. That, of course, means that the current bull market may have another six weeks to run. Or not.

No matter, yesterday’s 148 point surge on the Dow puts us at levels we haven’t seen in 2½ years as the Dow will start the morning over 12,000, the S&P over 1,300 and the Russell 2000 is just a couple of points shy of 800.

On the earnings front, Time Warner beat expectations by a nickel, reporting 67 cents in quarterly profit. Time Warner raised their dividend 11 percent. Coincidentally, so did toy-maker Mattel after a solid earnings report. Electronic Arts beat their estimate and raised guidance. EA shares are looking about 11 percent higher this morning.

All is not rosy, however. Last night, Aflac missed the $1.35 estimate by 2 cents and guided to the low end of the range. This morning Whirlpool reported $2.11, which missed the Wall Street mark by 15 cents.

About an hour ago, the January Challenger Job Cut Survey reported the lowest number of layoff announcements for any January since the survey started almost 30 years ago. THE ADP Report five minutes ago was positive. Perhaps Friday’s Unemployment Report will bring a pleasant surprise.

Asia was higher overnight. European markets are mixed. Our futures have been a little bit lower most of the morning.

At this point, adjusted for fair value, the S&P 500 futures are lower by a little more than a point, the Dow futures are down 14, and the NASDAQ futures are about 3 points below fair value.

February 1, 2011

Stock traders worldwide have, at least for now, decided that the Egyptian drama will play itself out without any big world-wide impact. Our rally yesterday carried on overseas overnight. Malaysian stocks dropped about a quarter of a percent, but just about all other markets overseas are trading higher.

Yesterday, the Dow Jones Industrial Average wrapped up its best January performance since 1997. Throughout the day today, we’ll find out how the automakers performed in January. The consensus calls for January overall sales of 12 ½ million units.

At 10 o’clock, the January ISM-manufacturing survey is expected to rise to a reading of 57½ from the December level of 57. Of course, anything over 50 indicates expansion of manufacturing. We’ll find out if there’s been any expansion in manufacturing JOBS on Friday.

Cummins reported earnings of $1.84 this morning. That’s 48 cents better than expected. Just minutes ago, Pfizer checked in with 47 cents in operating profit. That beat estimates by a penny. UPS made $1.08. That was a 3 cent per share beat.

Stock prices made back a good chunk of Friday’s losses yesterday, and it looks like they’ll try for much of the rest as we start trading today. At this point, adjusted for fair value, the S&P 500 futures are higher by about 6½ points, the Dow futures are up 44, and the NASDAQ futures are about 14 points above fair value.

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